Bolivian Soldiers Walked Into This Spanish Power Company, Hung A Flag And Seized Control

LA PAZ, Bolivia (AP) — President Evo Morales announced Tuesday
that his government is completing the nationalization of
Bolivia's electricity sector by seizing control of its main power
grid from a Spanish-owned company.

Morales took advantage of the symbolism of May Day, the
international day of the worker, to order troops to occupy
installations of the company, a subsidiary of Red Electrica
Corporacion SA.

The president's placing of another of what he deems basic
services under state control comes as neighboring Argentina moves
to take control of the country's oil company, YPF, from the
Spanish energy company Repsol SA, which had held a majority
interest.

Red Electrica is the sole operator of the transmission grid in
Spain, and the Spanish government holds a 20 percent stake in the
company.

Morales did not say how much the company would be compensated,
but the nationalization decree says the state would negotiate an
indemnization fee.

Morales said only $81 million had been invested in Bolivia's
power grid since it was privatized in 1997.

The government, meanwhile, "invested $220 million in generation
and others profited. For that reason, brothers and sisters, we
have decided to nationalize electricity transmission," he said.

Bolivian soldiers peacefully took over the company's offices in
the central city of Cochabamba, hanging Bolivia's flag across its
entry.

Red Electrica had no immediate comment. A security guard reached
at its headquarters in Spain said a statement was expected later.

The company owned 74 percent of Bolivia's electrical transmission
network, or 1,720 miles (2,772 kilometers) of high voltage lines.

Two years ago, on May Day, Morales' government took control of
most of Bolivia's electrical generation, nationalizing its main
hydroelectric plants.

Morales, Bolivia's first indigenous president, has moved to put
energy, water and telecommunications under state control.

But analyst Joao de Castro Neves of the Eurasia
Group said the president has been far more pragmatic and less
radical than the leftist leaders of Venezuela or Argentina.

"He knows his limits," Castro Neves said. "The Bolivian state
doesn't have the capacity to take over all these sectors
(including mining) and maintain the high levels of investment
they need."

He noted that Morales still hasn't come to terms for taking over
several small mines whose nationalization he announced last May
Day.

Bolivia's government also has not been able to negotiate
compensation for the power plants taken from GDF Suez of France
and Rurelec PLC of Britain.

Morales continues to deal with multinational companies such as
Brazil's oil company, Petrobras, and Repsol, whose president,
Antonio Brufau, he met with on Tuesday after announcing the power
grid takeover.

The two men inaugurated a $528 million natural gas plant in
eastern Bolivia that represents the single biggest foreign
investment in the country under Morales. It is designed to triple
the amount of gas sent to Argentina and the local market to 9
million cubic meters a day, said Carlos Villegas, president of
Bolivia's state energy company, YPFB.

In the case of electricity, the government is following a policy
of returning to the public domain a sector privatized during the
1990s.

"Just to make it clear to national and international public
opinion, we are nationalizing a company that previously was
ours," Morales said.

The 20 percent of the industry the government does not own is in
the hands of small companies serving cities in the eastern
lowlands that are not connected to the national grid.

In his first year in office in 2006, Morales announced he was
"nationalizing" the oil and gas sector. He began extracting
concessions from multinational energy companies, renegotiating
contracts to give Bolivians greater control of and a bigger share
of profits from the natural gas industry, the country's biggest
ahead of mining.

In 2008, he used May Day to announce the completion of the
nationalization of Bolivia's leading telecommunications company,
Entel, from Telecom Italia SpA

The nationalizations have not saved Morales from widespread
criticism by Bolivians upset over rising consumer prices, lower
domestic oil production and discontent over government plans to
build a highway through a lowlands nature preserve inhabited by
Indians.

Morales' approval rating is down to about 40 percent from 69
percent when he began his second term in January 2010.